Trademarks and Venture Capital Valuation

Abstract

This study investigates the role of trademarks in the start-up valuations of venture capitalists (VCs). Our results show that the number and breadth of trademark applications have inverted U-shaped relationships with the financial valuations of start-ups by VCs. The findings also indicate that in later funding rounds, the value of trademark applications decreases when the start-up progresses into more advanced development stages. Start-ups should consider these findings when seeking funding from VCs and should stress their market and growth orientations and their willingness to protect their marketing investments by highlighting their trademark activities.

Keywords: venture capital, trademarks, entrepreneurial marketing, patents, intellectual property

JEL Classification: O34, G24, L26